Adapting your agency to adaptive marketing

One of the really useful ways to orient your firm more effectively to the new realities of today’s marketing environment is to learn and embrace the concept of “adaptive marketing.”

Adaptive marketing differs from traditional marketing in significant ways, but the biggest and most important difference is that traditional marketing is largely about accomplishing a defined “scope of work.” Adaptive marketing is about accomplishing a “scope of value.”

The traditional approach, shown above, follows a sequential, step-by-step process designed to execute on a pre-defined set of deliverables.

The adaptive marketing approach is foundationally different in the sense that it is designed to accomplish a set of KPI's – Key Performance Indicators. The “scope of work” is subject to constant change and refinement, because the objective is not a deliverable but rather a result.

The adaptive approach requires constant measurement and optimization; a test and learn approach. With the increased emphasis on ROI, the adaptive marketing approach makes infinite sense. It forces clear and careful definition of objectives – a practice that is often short-circuited in the rush to get marketing programs executed and out the door.

There are three more key characteristics that are foundational to the concept of adaptive marketing:

1. A more flexible approach to marketing budgets

It stands to reason that a test-and-learn approach requires a much more fluid budgeting system. Rather than judging the value of work based on what it cost to produce or run, value is determined by whether or not it produced the desired results.

2. The attitude that everything is in constant beta

When is a website ever done? Or ever good enough? The attitude many marketers have toward their website must also be applied to their advertising or marketing program.

3. Success is evaluated in real-time, not just long-term

While many of the benefits of an effective marketing program are long-term in nature, an adaptive approach requires that success must be evaluated on an ongoing basis, in real time, so that the elements of the program that are not working can be optimized and redeployed.

Optimization now and forever

Progressive agencies are beginning to understand how the adaptive approach changes the operations and structure of the firm. When Richard Pinder was COO of Publicis Worldwide, he observed that ‘Advertising in the future will be much more like PR. We’ll be run more like a daily TV show or an interactive newspaper than an advertising factory.” Former VivaKi co-founder David Kenney took it a step further when he said “The media mix should be adjusted every 36 hours.”

Those of us who have had experience running political campaigns understand the basic nature of the adaptive approach, because political campaigns are all about real-time analysis of the situation and constant optimization of message and media.

An ongoing commitment to experimentation

One of the surprising results of a recent ANA (Association of National Advertisers) survey of CMOs was the broad agreement among marketing organizations that they must be in a constant state of what the survey called “experimentation.” Major marketers such as Unilever, P&G, and J&J devote around 15 percent of their total marketing budgets to “innovation funds.” Microsoft sets aside 30 percent of the total media budget to experimentation.

A recent paper from McKinsey recommends that 80 percent of a marketing budget be devoted to “proven vehicles,” with the remaining 20 percent reserved for what they call “well-structured experiments” characterized by different message, media mixes, and spending levels with “clear test protocols.” The paper notes that “Marketers who skimp on experimentation … may be overtaken by changing media patterns or forced to assume large risks by rolling the dice on unproven programs when markets shift."1

BBH Labs points out the adaptive marketing is about modular solutions that agencies provide to clients as part of a federation of marketing relationships. Is this more work for the marketer and their agencies? Absolutely, but the potential of an adaptive approach to improve the quality of marketing results is significant. As technology continues to provide better and better means to evaluate marketing success, it’s only a matter of time before all marketing organizations – clients and agencies alike – will adapt to an approach that emphasizes effectiveness over efficiency.

Ignition Consulting Group helps advertising agencies and other professional services firms create and capture more value. We do this by providing information, inspiration and insight via consulting engagements, presentations, and professional development programs designed around not just best practices, but “next practices.”